Along with April Fool’s Day and the start of the new tax year, this month has acquired a rather less humorous nickname—"Awful April." Dubbed by the media, this term reflects the wave of rising household bills hitting families across the country including energy costs, water bills and broadband. A few days later - April 6th - is the start of the new financial year, when tax changes kick in.
The government is making much of the fact that the minimum wage has also gone up from this month, and that will of course be very welcome for those who benefit.
An estimated one in 20 employees living in East Hampshire district (about 3,200 people) earn the minimum wage. But a larger number of people tend to benefit from the annual rise in the rate, as employers seek to maintain differentials for those a bit above the minimum.
The government has talked about an increase in the minimum wage as if it was a novel idea. In fact it has gone up every year since George Osborne introduced the ‘National Living Wage’ concept. Between 2015 and 2024 the full rate rose by a cumulative 70%, from £6.70 to £11.44.
Indeed the National Living Wage has been the biggest single factor in bringing down the proportion of people in low pay – from over 1 in 5 in 2010, to 1 in 25 by 2024.
This year’s minimum wage change is a further 6.7% increase. As a rare piece of April financial cheer it is unsurprising the government are lauding the move, with the Prime Minister saying “Today we're giving millions of Britons a pay rise”.
The only problem is: it isn’t Sir Keir giving the pay rise, because he doesn’t pay most people’s wages. Businesses do. And it is businesses that are bearing the brunt of the tax rises also kicking in this month.
High street retailers and hospitality businesses – a big part of East Hampshire’s local economy – face a sharp reduction in business rates relief. But the widest-impact tax hike is the increase in employer National Insurance contributions (NICs), which affects almost everyone.
Opposition MPs voted to exempt some particularly difficult cases, including social care providers, charities and hospices. But the government rejected even this.
The NICs increase will have a big effect on big-employment sectors, and disproportionately on part-time workers. So, while the minimum wage increase per se is a good thing, the cumulative effect with other policies could well see an impact on employment. When that happens, it tends to be an increase in youth unemployment that we see first.
